Australia fought alongside Britain in World War I, notably with the Australia and New Zealand Army Corps (ANZAC) in the Dardanelles campaign (1915). Participation in World War II helped Australia forge closer ties to the United States.

Parliamentary power in the second half of the 20th century shifted between three political parties: the Australian Labour Party, the Liberal Party, and the National Party. Australia relaxed its discriminatory immigration laws in the 1960s and 1970s, which favored Northern Europeans.

Thereafter, about 40% of its immigrants came from Asia, diversifying a population that was predominantly of English and Irish heritage. An Aboriginal movement that grew in the 1960s gained full citizenship and improved education for the country's poorest socioeconomic group.

In March 1996, the opposition Liberal Party–National Party coalition easily won the national elections, removing the Labour Party after 13 years in power. Pressure from the new, conservative One Nation Party threatened to reduce the gains made by Aborigines and to limit immigration.

In Sept. 1999, Australia led the international peacekeeping force sent to restore order in East Timor after pro-Indonesian militias began massacring civilians to thwart East Timor's referendum on independence. John Howard won a third term in Nov. 2001, primarily as the result of his tough policy against illegal immigration.

This policy has also brought him considerable criticism: refugees attempting to enter Australia—most of them from Afghanistan, Iran, and Iraq and numbering about 5,000 annually—have been imprisoned in bleak detention camps and subjected to a lengthy immigration process.

Asylum-seekers have staged riots and hunger strikes. Howard has also dealt with refugees through the “Pacific solution,” which reroutes boat people from Australian shores to camps in Papua New Guinea and Nauru. In 2004, however, the government began easing its policies on immigration.